I recently started my own company, providing operations consulting for small businesses. I don’t have an office, I just use a spare room in an apartment that I rent. Can I claim my rent to be a business expense?

Since you are self-employed, you can claim a certain percentage of your rent as a business-use-of-home expense – so long as you use the room as your principal place of business.

Anyone works from home as an employee, conversely, will need a T2200 form in order to claim rent and other business-use-of-home expenses. T2200 forms are provided by employers.

Please refer to this blog post for more information on business-use-of-home expenses.

Throughout tax season, Caroline, a tax analyst with TurboTax, will answer your tax questions. Have a question you’d like to ask? Click here.

I completed my taxes, and will only be getting a very small refund this year. Very small, as in $1.52! Do I still need to file a return? 

Even if you are certain that you have no balance owing or refund due in a given year, file a tax return for that year. 

Why? Because filing:

• reduces the ability of the CRA to subsequently make arbitrary adjustments to your income and taxes owing for that tax year
• determines your eligibility for government programs, like the Canada Child Tax Benefit (CCTB), GST/HST credit or any new tax rebates that may be announced
• reports earned income, which increases your future RRSP contribution room – and we all know the value of RRSPs as tax reduction tools

Throughout tax season, Caroline, a tax analyst with TurboTax, will answer your tax questions. Have a question you’d like to ask? Click here.

We purchased a new home in November 2011 and began to renovate the basement into an apartment for my parents. We purchased all the materials for the renovation in 2011, but the renovation was not complete until January 2012. We are adding the rental income to my husband’s taxes for 2012. Can we deduct the cost of materials from 2011 on 2012 taxes? How would they be claimed?

Rental expenses must be deducted in the year they are incurred, so you can’t claim the renovation expenses in 2012 if you paid for them in 2011. You can adjust your 2011 tax return to claim the expenses in 2011 though, even if no rental income was earned in 2011. In the description of the adjustment state that you thought you were able to claim them in 2012, but found out that you couldn’t and that you started receiving rental income in 2012.

There’s also something else for you to consider; if you don’t intend to actually make a profit charging rent to your parents, you may not have to include it as rental income. The question to ask yourself in this case is: Would you be charging the same amount of rent if it was to a complete stranger? If the answer is no, that you’d be charging more, then you aren’t really out to earn a profit. Of course if you aren’t claiming the rental income, you cannot claim any expenses either.

Throughout tax season, Caroline, a tax analyst with TurboTax, will answer your tax questions. Have a question you’d like to ask? Click here.

My 17 year old student son had a job at McDonald’s for a few months in 2012, making maybe $600.00. Does he need to file an income tax return?

Yes, he should file an income tax return. Filing an income tax return early allows a few things to happen:

1. He’ll be in the Canada Revenue Agency (CRA) database early, which means that he is registered and won’t have a problem starting to collect GST when he is able to.
2. He’ll start building RRSP contribution room early, which will help for when he starts contributing to his RRSP.
3. He may have overpaid income tax, CPP or EI; if that is the case, he’ll get that money back.

TurboTax Online allows people who make under $20,000 to file for free; so he can use any version of TurboTax Online and he’ll be able to NETFILE his return.

Throughout tax season, Caroline, a tax analyst with TurboTax, will answer your tax questions. Have a question you’d like to ask Caroline? Click here.